Paddy Power Betfair's market valuation surged more than €400m yesterday, after the betting giant confirmed talks to merge its US business with America's FanDuel to capitalise on the expected liberalisation of US betting laws.

Paddy Power Betfair's market valuation surged more than €400m yesterday, after the betting giant confirmed talks to merge its US business with America's FanDuel to capitalise on the expected liberalisation of US betting laws.

The move comes in the immediate wake of a US Supreme Court ruling which this week struck down a federal law that has severely restricting sports betting there since 1992.

Dublin-based Paddy Power Betfair said a deal with FanDuel would "create a combined business to target the prospective US sports betting market".

FanDuel has six million registered users and provides so-called fantasy sports betting.

"Discussions are ongoing and there is no certainty as to whether agreement will be reached, or as to the terms or timing of any transaction," Paddy Power Betfair said.

On Tuesday, GAN, an Irish developer and supplier of internet gaming software, services and content to the gaming industry in the US, welcomed the court decision.

It said it was preparing to launch internet sports betting in both New Jersey and Pennsylvania for its clients in the second half of this year.

Market watchers think Paddy Power's talks may be the start of a wave of deals involving betting companies in the US.

The country's highest court on Monday struck down the federal law that had barred single-game gambling in most of the country, saying it was unconstitutional. Nevada, which is home to Las Vegas, had been the only state with legal single-game wagering.

Sports gambling could begin in weeks in casinos and racetracks in New Jersey, which instigated the legal fight by repealing its own gambling ban.

Paddy Power Betfair already runs a US horse-racing television and betting network and has an online casino business in New Jersey that accounted for 6pc of revenues last year.

The Irish business bought into the US fantasy sports betting market last year with a $48m (€40.7m) acquisition of DRAFT.

Fantasy football and other games let players bet on virtual teams made up of real players, competing based on their statistical performance in professional games.

FanDuel, also a fantasy-sports betting site, was founded in 2009 in Texas, according to its website. Paddy Power shares were up 6.88pc yesterday at €94 each - adding €420m to take the group's market capitalisation to €7.99bn.

An acquisition of FanDuel "would improve the chances of Paddy Power Betfair establishing a foothold in the US sports betting market", Morgan Stanley analysts said in a note to clients.

Analysts at Davy said they thought the talks were "reasonably well advanced," indicating they'd been under way well ahead of the US court ruling.

"Instinctively this feels like a smart deal for the group," Davy said.

Paddy Power Betfair issued its statement after industry news website Legal Sports Report published an article about the companies being in talks. Paddy Power Betfair is probably offering less than $1bn, according to the site.

US news website Axios reported in March that FanDuel was in talks to go public via a reverse merger with Platinum Eagle Acquisition, a special-purpose acquisition company formed by media executive Jeff Sagansky.

Among the firms that have invested in FanDuel since its founding are KKR, Google owner Alphabet's Capital G fund, Time Warner Investments and NBC Sports Ventures.

Deregulation in the US could trigger a new strategic direction for the big gambling firms that emerged from a wave of European consolidation, including Paddy Power Betfair. (Additional reporting Reuters/Bloomberg)